El Salvador was the first nation in the world to recognize Bitcoin as legal cash. El Savador has enacted a law that will control how both public and private companies can issue other digital assets.
The initiative has the support of parliamentarians from the ruling party. Allied with President Nayib Bukele, it wants to draw domestic and international investors. This will be done by opening up new funding options for individuals, businesses, and the government.
On Wednesday, the 47-article law received 62 votes in favor out of 84 in Congress.
“The purpose of this law is to establish the legal framework. The framework provides legal certainty to transfer operations to any title of digital assets used in public issuance offers.” The legislation states.
According to the law, issuers may make public offerings using existing digital assets. By the option to create new ones through them.
The law also establishes the National Commission for Digital Assets and the Bitcoin Funds Administration Agency. It will be in charge of managing, safeguarding, and investing funds from the government’s public offerings of digital assets.
El Salvador’s Legislative Assembly has just approved, by an overwhelming majority, the new Digital Securities Law!
Forward, always forward…
More information on this thread👇🏼 https://t.co/8C21ZilyVP
— Nayib Bukele (@nayibbukele) January 11, 2023
The provisions of the law do not apply to digital currencies issued by central banks. It would also not apply to digital assets that are legally recognized as legal tenders. Digital assets such as Bitcoin, as well as the video game ecosystem or Non-Fungible Tokens.
Bukele’s office did not immediately respond to a request for comment on whether the new legislation would apply to the president’s announcement of Bitcoin Volcano Bonds.
Nonetheless, President Bukele shared on Twitter a message from the country’s Bitcoin office. Stating that the law also paves the way for the acquisition of $1bn in “crypto bonds” or “volcano bonds”.
El Salvador Constructs the First “Bitcoin City” Financed by BTC Bonds
President Nayib Bukele of El Salvador announces the opening of Bitcoin City, which will be initially supported by $1 billion in Bitcoin bonds. El Salvador is still at the forefront of the acceptance of Bitcoin (BTC).
Bukele originally made the announcement during El Salvador’s Bitcoin Week conference, which aimed to highlight the widespread acceptance of Bitcoin in the nation and boost public engagement.
Prominent bitcoin firms including cryptocurrency exchange Bitfinex and Adam Back’s Blockstream will actively participate in the construction of Bitcoin City. By providing a securities platform to house the Bitcoin bonds, the exchange will promote El Salvador’s Bitcoin City effort, according to Bitfinex CTO Paolo Ardoino.
The president wants Bitcoin Metropolis to develop into a fully viable city with neighborhoods. Additionally, Bukele stated that only value-added tax (VAT) will be levied on the populace. The remaining taxes going toward maintaining public facilities and infrastructure in the city will also be taxed.
Samson Mow, chief security officer of Blockstream, explained the viability of obtaining the $1 billion Bitcoin bonds at the conference:
“They have a lot of whales with Bitfinex. I don’t see any issues with funding a $1 billion bond.”
Mow also told the populace that a five-year lock-up term would apply to the $500 million in Bitcoin bonds. Thus removing the invested money from circulation worldwide. The businessman also described how a tenfold growth in efforts of a similar nature. Other nations will eventually remove half of Bitcoin’s 21 million market valuation from circulation.
The El Salvadorian government started reinvesting unrealized gains into various infrastructure development projects not long after Bitcoin became widely used.
The El Salvadorian government contributed $4 million from the Bitcoin Trust’s earnings in mid-October to build a new veterinary hospital in the nation’s capital, San Salvador.
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